Sinopec, ENN drop US$2.2 billion hostile bid for China Gas Holdings

HONG KONG -- China's Sinopec and ENN Energy Holdings said Monday they have dropped a US$2.2 billion offer for China Gas Holdings, the first hostile bid by a state-owned Chinese business for a private firm.

State-run Sinopec and piped-gas distributor ENN Energy Holdings said they "will not proceed" with the offers made last December, according to a filing to the Hong Kong stock exchange where they are listed.

The companies said certain preconditions of the acquisition, which include Chinese regulatory approvals, "remain unfulfilled."

The firms had offered HK$3.50 (US$0.45) per China Gas share to buy the private natural gas distributor, an offer it described as failing to "reflect the fundamental value of the company."

The bid partners had said the synergy between China Gas and ENN, which has 100 piped gas projects across China, would increase their market penetration.

The bid came after Sinopec raised its stake in a major Australian-U.S. liquefied natural gas project last December, amid Beijing's surging demand for gas.

Chinese demand for gas is forecast to jump 5.9 percent every year until 2035, compared with OECD growth of 0.5 percent. This would take the Asian giant's share of global gas consumption from 2.7 percent in 2008 to 8.7 percent by 2035.